S.H.Kapadia, J. - (1.) A short point which arises for determination in this civil appeal is : whether 'puffs' obtained by the swelling or roasting of cereals constitute preparations of cereals under Chapter Heading 19.04. According to the appellant 'puffs' from cereals fall under Chapter Heading 21.07 (Edible preparations).
(2.) THE assessee manufactures 'puffs' from cereals namely wheat and soya nuts. THE said product is packed in unit containers and supplied to Integrated Child Development Scheme (for short 'ICDS') in Haryana. On 21.3.1997 a show-cause notice was issued by the Department raising a demand on the assessee for mis-declaration of the said products as 'chabena/prasad'. In the said show cause notice it was further alleged that the products were sold under the brand name 'bonton'. Under the said show cause notice it was also alleged that the said 'puffs' were sold in the market as breakfast cereals, high in protein and low in cholesterol. It was further alleged that the said products were sold to five star hospitals and public schools. In the circumstances the assessee was called upon to pay to the Department Rs.2.31 crores as duty for the aforesaid period. This demand has been confirmed by the authorities below as well as by the Tribunal. Hence this civil appeal. In this case we are concerned with two sets of the same entry since the show cause notice covers the period of 5 years between 1992-93 to 1996-97. For the period 1994-95 we quote hereinbelow Chapter Heading 19.04 JUDGEMENT_347_TLPRE0_2007Html1.htm For the same period we quote hereinbelow Chapter Heading 21.07: JUDGEMENT_347_TLPRE0_2007Html2.htm At this stage it may be noted that Chapter sub- heading 2107.91 during the relevant period attracted 50% duty. However, the effective rate of duty was nil in view of general exemption No.83 (item No.25) of the Notification No.2/1994 dated 1.3.1994. We quote hereinbelow item No.25 of General Exemption No.84 vide Notification No.2/1994. JUDGEMENT_347_TLPRE0_2007Html3.htm
(3.) HEARD learned Counsel on both sides. In the present matter the show cause notice concentrated more on the denial of exemption claimed by the assessee, than the classification. We may make it clear that the 'puffs' prepared from cereals cannot fall within the item 'Prasad/prasadam'. To that extent we are in agreement with the impugned order of adjudication. The main question which was required to be decided was whether 'puffs' made from cereals would at all fall under Chapter Heading 19.04 or whether they would fall under Chapter Heading 21.07 (remoulded as Chapter Heading 21.08 during the Assessment Year 1996-97). For the sake of clarity we also quote hereinbelow the remoulded Chapter Heading 21.08. JUDGEMENT_347_TLPRE0_2007Html4.htm ;